Reshma Sohoni, Partner, Seedcamp

Please give us a bit of background on yourself, and how your organisation plays a leadership role in the financial technology space.

I co-founded Seedcamp in 2007 alongside Saul Klein to help build the European startup ecosystem, bridging the gap between European entrepreneurs and funding. Now, ten years later, Seedcamp is one of the most prominent seed investors in tech startups.

When we started investing in fintech back in 2007 it wasn’t even a known term or a compelling sector yet. We were able to open a window on the upcoming opportunities that we were sure were going to come. We continued to invest in the sector, seeding bleeding edge technologies and ambitions. Hopefully that has given confidence to more disruptive ideas. I run Seedcamp with partner Carlos Espinal and we are recognised as being one of the most active investors in fintech and have backed the likes of unicorn Transferwise as well as FinanceFox, Monese, Revolut, Curve and Fraugster to name but a few.

How well are financial companies adapting to the rapid pace of fintech development? What fields are furthest ahead of the game, and what sectors are being left behind?

Financial companies have definitely woken up to the importance of fintech businesses and have had to learn from the agility and speed with which their younger counterparts are developing new products and solutions. We’ve seen significant development in B2C companies offering customers a better way to budget, manage and transfer their finances from the likes of Transferwise, Monzo and Curve.

Not dissimilar to other sectors, innovation in fintech has also been implemented first from easier and then to harder solutions. That manifests itself in two ways: 1) From services which can be easily automated, aren’t overly reliant on incumbent infrastructure, and which require more human intervention. 2) From B2C and then winding its way into B2B, from small to bigger enterprises. As such, sectors with high volumes and customer touch points have been furthest ahead of the game (starting with payments and trading, then into all things peer-to-peer, and now into more complex areas requiring a lot more capital like core banking and credit cards).

Lagging behind have been more complex sectors like InsurTech and service oriented sectors such as wealth management. On the B2B side, the technology itself can often be much more complex with a lesser concentration of subject matter experts who have experience with those problems in the first place and have the sector and technical experience to build relevant solutions. These solutions also have much lower fault tolerance given they are deployed at such scale and with massive ramifications. Finally, sales cycles are much longer with more buy in required. So you can see solutions into this space have been slower to develop and be adopted. Look at any fintech landscape map and you’ll see a lot of crowd-funding, P2P lending, currency and remittance transfer businesses but fewer B2B products, security, or back-end solutions.

What challenges do you see for fintech development and disruption, both from a user's perspective and from a regulatory standpoint?Fintech startups rightly have been focused on solving very specific problems and therefore offering point solutions. Development of these companies into long-term disruptors will need to reach much larger scale of adoption than financial services companies to date. My view is that user adoption needs to be 10x what traditional financial services companies have managed to date. Regulation across most of Europe is firmly on the side of consumer championship and removing unnecessary hurdles. The UK has been particularly strong with programs such as the FCA sandbox that allow upstarts a more realistic entry point into the regulated spaces. This has been a big benefactor for the rise of fintech disruptors. What will be important going forward is that the regulatory framework keeps moving in this direction and even more so that it is implementable. Incumbents will fight against regulation that favors competition and new entrants and it will be the responsibility of consumers, the upstarts, and the regulators to stay vigilant and push against these entrenched interests.

What impact do you think Brexit will have on the broader financial technology industry in the UK?

There’s still a lot of uncertainty when it comes to Brexit and what it exactly it will mean for the UK tech industry. Our strategy at Seedcamp hasn’t changed following Brexit and it won’t for the foreseeable future. Our hope is that the powers that be appreciate what a huge asset the tech sector has been for the UK, not to mention our legacy of leadership in financial services, and will continue to build UK and Europe into a tech powerhouse. Our view is that the UK must do all it can to retain its ability to enable UK startups to passport across Europe and our immigration policies must remain open for the best talent to come to the UK to help start and scale these businesses.

The founders we back are focused on creating scalable, global businesses and, for them, the UK is never the only target. Ultimately, I think the tech sector is incredibly resilient. Entrepreneurs start companies because they see a problem they want to solve and I don’t see Brexit putting a stop to this. Brexit certainly hasn’t halted our investment in tech businesses and we continue to be impressed by the quality of founders and ideas originating from the UK and across Europe.

What will you be discussing at The Economist's Finance Disrupted Conference on January 25th 2017 in London?

I’ll be talking about Fintech ‘unicorns and unicorpses’ and the impact of the financial climate on businesses in this space. Topics including the development of fintech companies, regulatory forces, business model evolution, consumer adoption and more.